Economy of Denmark

Economy of Denmark

Copenhagen
Currency	Danish krone (DKK, kr)
Fiscal year	calendar year
Trade organisations	EU, WTO, OECD and others
Country group	Developed/Advanced[1] High-income economy[2]
Statistics
Population	5,961,249 (January 2024)[3]
GDP	$406 billion (nominal, 2023)[4] $432 billion (PPP, 2023)[4]
GDP rank	38th (nominal, 2023) 52nd (PPP, 2023)
GDP growth	3.6% (2022) 0.0% (2023) 1.0% (2024)[4]
GDP per capita	$68,800 (nominal, 2023)[4] $73,400 (PPP, 2023)[4]
GDP per capita rank	9th (nominal, 2023) 11th (PPP, 2023)
GDP by sector	agriculture: 1.6% mining and quarrying: 1.2% industry: 14.4% utilities and construction: 7.7% services: 75.2% (2017)[5]
Inflation (CPI)	4.8% (2023)[4]
Population below poverty line	4% in poverty (2021)[6] 8.4% at risk of poverty or social exclusion (AROPE, 2021)[7]
Gini coefficient	27.5 low (2019)[8]
Human Development Index	0.952 very high (2022)[9] (5th) 0.898 very high IHDI (2021)[10] (3rd)
Labour force	3,132,170 (2022)[11] 77.5% employment rate (2018)[12]
Labour force by occupation	agriculture: 2.4% mining and quarrying: 0.1% industry: 10.7% utilities and construction: 6.7% services: 79.9% (2017)[13]
Unemployment	2.5% (January 2022)[14] 12.2% youth unemployment (15 to 24 year-olds; July 2020)[15]
Average gross salary	DKK 45,482 / €6,107 monthly (2021)
Average net salary	DKK 30,971 / €4,159 monthly (2021)
Main industries	wind turbines, pharmaceuticals, medical equipment, shipbuilding and refurbishment, iron, steel, nonferrous metals, chemicals, food processing, machinery and transportation equipment, textiles and clothing, electronics, LEGO, construction, furniture and other wood products
External
Exports	$234.2 billion (2021)[16]
Export goods	wind turbines, pharmaceuticals, machinery and instruments, meat and meat products, dairy products, fish, furniture and design
Main export partners	Germany 14.0% Sweden 10.0% United States 10.0% China 6.0% Norway 5.0% (2021)[16]
Imports	$208.1 billion (2021 est.)[16]
Import goods	machinery and equipment, raw materials and semimanufactures for industry, chemicals, grain and foodstuffs, consumer goods
Main import partners	Germany 21% Sweden 12% China 9% Netherlands 8% Poland 4.0% (2021)[16]
FDI stock	$188.7 billion (2017)[16] Abroad: $287.9 billion (2017)[16]
Current account	$32.4 billion (2021 est.)[16]
Gross external debt	$484.8 billion (2016)[16]
Net international investment position	64.6% of GDP (1 July 2018)[17]
Public finances
Government debt	33.2% of GDP (2019)[18] DKK 770.832 billion (2019)[18]
Budget balance	DKK 84.9 billion surplus (2019)[18] +3.7% of GDP (2019)[18]
Revenues	53.3% of GDP (2019)[18]
Expenses	49.6% of GDP (2019)[18]
Economic aid	€613 million from European Structural and Investment Funds (2007–2013)[19]
Credit rating	Standard & Poor's:[20][21] AAA (Domestic) AAA (Foreign) AAA (T&C Assessment) Scope:[22] AAA Outlook: Stable
Foreign reserves	$75.25 billion (2017)[16]
All values, unless otherwise stated, are in US dollars.

The economy of Denmark is a modern high-income and highly developed mixed economy. The economy of Denmark is dominated by the service sector with 80% of all jobs, whereas about 11% of all employees work in manufacturing and 2% in agriculture. The nominal gross national income per capita was the ninth-highest in the world at $68,827 in 2023.

Correcting for purchasing power, per capita income was Int$57,781 or 10th-highest globally.^[23] The income distribution is relatively equal but inequality has somewhat increased during the last decades.^[24] In 2017, Denmark had the seventh-lowest Gini coefficient (a measure of economic inequality) of the then 28 European Union countries.^[25] With 5,932,654 inhabitants (1 January 2023),^[26] Denmark has the 38th largest national economy in the world measured by nominal gross domestic product (GDP), and the 52nd largest in the world measured by purchasing power parity (PPP).

Denmark has a very long tradition of adhering to a fixed exchange-rate system and still does so today. It is unique among OECD countries to do so while maintaining an independent currency: The Danish krone, which is pegged to the euro.^[27] Though eligible to join the EU's Economic and Monetary Union (EMU), Danish voters in a referendum in 2000 rejected exchanging the krone for the euro. Whereas Denmark's neighbours like Norway, Sweden, Poland and the United Kingdom generally follow inflation targeting in their monetary policy, the priority of Denmark's central bank is to maintain exchange rate stability. Consequently, the central bank has no role in a domestic stabilization policy. Since February 2015, the central bank has maintained a negative interest rate to contain an upward exchange rate pressure.

In an international context, a relatively large proportion of the population is part of the labour force, in particular because the female participation rate is very high. In 2017, 78.8% of all 15-to-64-year-old people were active on the labour market, the sixth-highest number among all OECD countries. With a 4.8% unemployment rate, unemployment is relatively low, in comparison to other European countries where the average unemployment rate is 6.7%.^[28] The labour market is traditionally characterized by a high degree of union membership rates and collective agreement coverage. Denmark invests heavily in active labor market policies and the concept of flexicurity has been important historically.

Denmark is an example of the Nordic model, characterized by an internationally high tax level, and a correspondingly high level of government-provided services (e.g. health care, child care and education services). There are also income transfers to various groups, such as retirees, disabled people, the unemployed, and students. Altogether, the amount of revenue from taxes paid in 2017 amounted to 46.1% of GDP. The Danish fiscal policy is generally considered healthy. The net government debt is very close to zero, amounting to 1.3% of GDP in 2017. The Danish fiscal policy is characterized by a long-term outlook, taking into account likely future fiscal demands. During the 2000s, a challenge was perceived to government expenditures in future decades. It was ultimately a challenge to fiscal sustainability from demographic development, in particular higher longevity. Responding to this, age eligibility rules for receiving public age-related transfers were changed. Since 2012, calculations of future fiscal challenges, from both the government and independent analysts, have generally perceived Danish fiscal policy to be sustainable. In recent years, it was considered overly sustainable.